Murray Goulburn could be in line for rescue after Fonterra admits to buyout bid

05-Oct-2017 - Last updated on 05-Oct-2017 at 11:49 GMT

Fonterra has confirmed that it has submitted a bid for Murray Goulburn, ending speculation that the troubled dairy co-operative will go without a suitor.

Australia’s biggest dairy processor had sought bids as part of a strategic review after two difficult years during which it battled low milk prices and was forced to write off almost A$150m (US$117m) in its members’ debts.

Though it had received a number of “indicative proposals”, MG has still struggled to find a substantial formal bid, leading it to release a statement last month calling into question the likelihood of a buyout at all.

But Fonterra Australia managing director Rene Dedoncker, speaking after releasing positive full-year results, confirmed that a bid had been lodged for MG.

“The answer is yes, we have put forward a proposal,” Dedoncker told the ABC Rural radio station.

“It’s non-binding and indicative and at this point. We are going to sit tight and give the MG board the respect they deserve to consider all proposals.”

Dairy analysts believe that the Fonterra takeover might not be the answer to MG’s prayers, however,

They say that if the deal were to go ahead, the two companies would control 40-50% of the milk produced in Australia, potentially leading a competition inquiry.

Aussies most loyal to Foodland, but supermarkets still struggling to raise market share

With a 94% satisfaction rate, Foodland is the consumers’ favourite out of Australia’s big five supermarket chains.

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Not only was it top scorer in a survey by Roy Morgan Research, it was also one of only two of the retailers to increase its score over the last year.

Aldi came close behind Foodland in second place, followed by Woolworths (90% satisfaction), Coles (88.4%) and IGA (84.7%), based on the views of 12,000 shoppers over the last year.

Of the two majors, shoppers at Woolworths were the most loyal, buying 80% of their shopping at the chain, compared to Coles, whose customers would 67.4%.

Foodland loyalty, at 71%, was between the two, though Aldi came in well behind the other four supermarkets, with only a 55.5% share of their customers’ spend.

Overall satisfaction leader Foodland also scored highest for satisfaction for its dairy, deli, fresh produce and seafood. Second-placed Aldi led in terms of packaged groceries, while Coles and Woolworths lead jointly in satisfaction with bread. Meanwhile, IGA did not perform best in any major product area or section.

Amid tough supermarket competition, retailers must keep track of relative satisfaction between the major brands, said Roy Morgan’s communications chief, Norman Morris.

"There appears to be plenty of scope to increase supermarket sales if customer loyalty can be improved. Currently the best performers in the market are only achieving around 70% of their main customers’ total supermarket spend, with the lowest achieving just over half,” he said.

Interestingly, all of the top five supermarkets have seen a decline in their share of customers spend, despite various attempts at loyalty programmes.

“Increasing the share of customer spend for the major supermarkets has remained a considerable challenge for some time,” Morris added.

Adelaide given bread for deeper study into grains

Adelaide University has been awarded a grant of more than A$1.1m (US$860,000) to study foodgrains as part of a A$15m project by the Grains Research and Development Corporation (GRDC) to increase research capacity in the subject.

The grant will allow the university to install LED lighting in glasshouses and two newly installed growth rooms as it moves away from facilities shared with Csiro and the SA Research and Development Institute.

It will also set up a heat and drought phenotyping system, a bird-proof enclosure and a polytunnel.

The investments are expected to improve trait selection and increase trait delivery to breeders. They will also allow simultaneous drought and heat experiments, expand bulking and selection capacity, and reduce research costs through more efficient energy.

“Outputs from the university’s GRDC research investments continue to deliver new knowledge and innovations to drive crop varietal improvements, practice change and ultimately grower profitability,” said GRDC chairman John Woods.

The funding comes after the corporation recently conducted an open, competitive process seeking applications for grants between A$20,000 and A$3m for the construction of new or enhanced grains R&D infrastructure in Australia.